Japan agrees to resume stalled Colombo Light Rail Transit project of Sri Lanka

Colombo, Sri Lanka (Urban Transport News): In a significant diplomatic development, Sri Lanka and Japan have agreed to revive dormant bilateral projects, prominently featuring a $1.5 billion Japanese-funded light railway initiative. This renewal of collaboration underscores the strengthening ties between the two nations and holds promise for mutual development and economic growth.

The accord was reached during a momentous visit to Sri Lanka by Japanese Foreign Minister Yoko Kamikawa. Both parties expressed eagerness to reignite various initiatives that had been put on hold, signaling a renewed commitment to cooperation and progress.

Sri Lanka's decision to restructure its foreign debt, amidst a $2.9 billion bailout from the International Monetary Fund (IMF), reflects a strategic move following a severe financial crisis in 2022, which saw the nation defaulting on its foreign debt obligations.

Japan, as a key stakeholder in Sri Lanka's economic landscape, anticipates swift progress with the signing of a Memorandum of Understanding (MoU) between Sri Lanka and the official creditor committee, co-chaired by Japan, tasked with facilitating the restructuring of Sri Lanka’s bilateral debt.

During her remarks to the press in Colombo, Minister Kamikawa emphasized Japan's commitment to bolstering Sri Lanka's development efforts. She outlined Japan's eagerness to expedite yen loan projects once the MoU on debt restructuring is formalized, underscoring Japan's readiness to engage once the necessary bilateral agreements are in place.

The light rail project, initially initiated in 2020, faced setbacks when Sri Lanka shifted its focus towards closer ties with China under the previous administration. However, with the current government's affirmation to revive stalled projects, there's renewed optimism for the resumption of the rail initiative.

Following cabinet approval in July, President Ranil Wickremesinghe has been empowered to determine the timeline for reactivating projects with Japan, signaling the government's proactive stance toward fostering fruitful collaborations.

Japan stands as one of Sri Lanka's principal bilateral lenders, trailing only behind China, with approximately $2.7 billion in outstanding loans. India also holds a significant position as a key creditor, further illustrating the intricate web of international financial relations Sri Lanka navigates.

Sri Lanka's Foreign Minister, Ali Sabry, expressed confidence in the nation's ability to swiftly finalize the requisite agreements, aiming to meet the deadlines for the upcoming IMF review. This proactive approach reflects Sri Lanka's commitment to economic stability and fiscal responsibility.

The agreement between Sri Lanka and Japan to revive stalled projects, including the light rail initiative, marks a pivotal step towards reinforcing bilateral cooperation and fostering sustainable development. As both nations navigate complex economic challenges, such collaborative endeavors serve as beacons of hope for progress and prosperity in the region.